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“The issues in Europe are going to continue to very difficult and it’s not clear what the answer will be," he said.

“On the one hand you either need a transfer union and that seems very difficult for the German voters to accept, or countries in the south are going to have to detach from the euro.

“Otherwise how can they ever be globally competitive?"

He said ANZ’s exposure to the euro zone was small.

Mr Smith was in Beijing to promote ANZ’s plan to pump more than $300 million into its China division to support network expansion plans.

It already employs about 700 staff in China, up from fewer than 100 four years ago.

Amid signs the Chinese economy is slowing, Mr Smith expressed confidence in the outlook for Australia’s most important trading partner.

“The economy is still very well placed to expand," Mr Smith said.

“Looking at the growth numbers, they’re still extremely good by global standards and indeed are very consistent with what was outlined in the five-year plan released [by the Chinese government] last year."

Mr Smith said he did not believe the Chinese economy would suffer a hard landing, although he noted the construction sector was “doing it a bit tough".

“The economy continues to move, the urbanisation continues, the infrastructure projects that are under way continue and of course the demand for resources is still there," he said.

ANZ is expanding into Asia and aims to earn between 25 per cent and 30 per cent of group profit in the region by 2017.

Late last year Mr Smith talked up the bank’s intention of acquiring Asian assets from struggling European institutions looking to retreat from the region.

Mr Smith said yesterday the assets had turned out to be “too expensive".

He has said previously that cheap loans provided by the European Central Bank’s long-term refinancing operations had delayed the need for European banks to divest assets.